A Parliamentary panel has reported that access to education loans has reduced even as the cost of higher education has increased, and recommended that the government avoid curtailing or rejecting loan applications.

The findings, tabled in the Rajya Sabha by the Standing Committee on Education, Women, Children, Youth and Sports, chaired by Congress MP Digvijaya Singh, said many students from disadvantaged and rural backgrounds remain unaware of government loan schemes, including those publicised under the PM Vidyalaxmi scheme.

The committee observed that loan uptake is concentrated in Tamil Nadu, Kerala and Maharashtra, indicating uneven implementation across States. It said students in northern and rural regions continue to face barriers despite being among those most in need.

According to the report, banks continue to rely on documentation and guarantor requirements, despite schemes offering collateral-free loans. The panel said due diligence procedures remain a hurdle for many applicants.

Between 2014 and 2025, active student loans fell from 23.36 lakh to 20.63 lakh. Over the same period, total credit increased from Rs 52,327 crore to Rs 1,37,474 crore, which the committee said reflects higher borrowing per student due to increased education costs.

The panel recommended that the Higher Education and Financial Services departments expand access to loans, with priority for Below Poverty Line families.

Under the PM Vidyalaxmi scheme, 55,887 applications were received between 25 February and 31 August this year. Loans amounting to Rs 4,427 crore were sanctioned, but only 30,442 loans were approved and 21,967 disbursed. The total disbursed amount was Rs 688.27 crore, about 15 per cent of the sanctioned value.

The committee called for simplified processes, strict adherence to no-collateral provisions for eligible students, extended interest subsidies and targeted awareness campaigns in underserved areas. It warned that without these measures, education loans may fail to support equitable access to higher education.

Inputs from PTI

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